Economy

Base Resources gets reprieve after Sh19.1bn debt deferred

BASE

A Base Titanium facility in Mombasa port. The miner shipped the first consignment of minerals from its Kenya titanium project in February after years of delay. PHOTO | FILE

Lenders have rescheduled a Sh19.1 billion ($215 million) debt to Base Resources in a move that gives the Kwale-based miner fresh opportunity to repair a financial dent it suffered due to delayed commencement of titanium sales.

The company had initially anticipated to start earning from its titanium ore in October 2013 but delay in obtaining export licence pushed its first export date to February this year, affecting a repayment schedule signed with lenders in 2011.

“Under the approved terms of the restructure, all principal repayments and funding of the debt service reserve account will be deferred by six months with some re-profiling to suit future cash flows,” the company said Monday.

Once effected, the first principal repayment will be deferred from December to June 2015 and the debt repayments during the 2015 financial year will be reduced from Sh4 billion ($45.9 million) to Sh977.3 million ($11 million), Base Resources said.

“The finalisation of the restructure is subject to the agreement and execution of final documentation, which is expected to be concluded over the next two months. The implementation of the debt facility restructure puts Base in a sound position to complete the ramp-up and optimisation of the Kwale project,” the company said.

Base Resource’s Kenya project is funded through a combination of debt and equity with lenders including banks and development financial institutions, and has an estimated lifespan of between 11 and 14 years.

The miner shipped the first consignment of minerals from its Kenya titanium project in February after years of delays at Kenya’s biggest mining project.

READ: Base Titanium makes first shipment

The project has been dogged by delays since 2006, mostly due to financing constraints, environment activist protests, and disputes with local farmers over compensation for land and bureaucracy.

Besides the challenges with delayed export schedules, the company is also in a tussle with the county government of Kwale which wants to slap it with an export levy but the miner feels the governor is overstepping his authority.

Base completed four bulk shipments of ilmenite (a total of more than 90,000 tonnes) and two bulk shipments of rutile (a total of about 14,000 tonnes) during the June quarter.

A further bulk shipment of 10,000 tonnes of rutile scheduled for late June was delayed to the first week of July.

The company expects the price of zircon to go up in the second half of the year as global stocks shrink but rutile and ilmenite prices are expected to remain flat.